Just books - coming to a town or iPad near you?

My last post somehow found itself on the front page of both the Vex News and Quadrant websites as recommended reading.  Disconcerted, I've been wondering how to retrieve my reputation as a Big Government loving bureaucrat.  Luckily, Twitter presented me with this article today,

For those who can’t be bothered reading the whole thing, it’s a Forbes India interview with Sunder Rajan, the founder of a private company called Just Books.  Just Books is a lending library ...except it’s a private lending library - entirely funded, run and founded by Rajan and his private company, which works on a franchise model.  In the article one of the franchisees says that he makes Rs 2500 per month off the average customer borrowing two books and a magazine, but this appears to be a typo in the article - the annual subscription cost is Rs 2500 - the monthly fee is Rs. 250.  Just as well - Rs. 2500 works out at around $50 Australian, which would be a ridiculously high fee even here.

I had a number of questions when I read this article - What’s so special about a library that uses RFID and moves books between branches? (Pretty much every public library in Australia will have done this, or at least planned for it, by 2015)  Don’t India’s public libraries already do similar things?  How do ordinary Indians afford to pay to borrow books?  How much is Rs 250 to the average Indian?  Why is there a market for a private library service in Bangalore?

Private library service?

The last question is probably the most important, and the most useful.  Private library services have been tried in richer countries like Australia, and failed.  Victoria has a particularly interesting history when it comes to subscription libraries and an attempt at privatisation.  The Mechanics Institute buildings that litter Victoria were once vibrant and full, usually including a circulating subscription library.  Only one Mechanic’s Institute library remains (in Prahran) - no longer a subscription library but maintained with funds from the State Government, essentially a relic kept open because of its historical link to the past and extensive local history collection.  The Athenaeum Library is the only other surviving subscription library of note, operating out of the Athenaeum Theatre building in Melbourne.

Public libraries run and funded by local governments have replaced the Mechanics Institutes and other subscription library services - generally offering superior service and a wider range at a more efficient cost.  When the Kennett Government forced local governments to put a large percentage of their services out to tender under Compulsory Competitive Tendering legislation, public library staff found themselves having to write tender documents in order to keep their jobs.  Ultimately, they were the only ones tendering - there were no expressions of interest from the public sector.

That’s not to say they couldn’t.  Some public libraries in the United State and, more recently, the UK, are now being run on contract by Library Systems Services (LSSI).  Such outsourcing arrangements have not been without controversy, but the reality is that LSSI is able to provide broadly the same services these libraries traditionally provided, at a lower cost (even if there are arguments about whether, long term, this is the best model for a really high quality service).

Outsourcing to a company providing library services to all citizens, however, is quite a different thing to the Just Books model.  Just Books doesn’t really provide a public library service - they provide a book hire service.  The terms and conditions explicitly state that they can reject anyone’s membership for any reason, and that only the person who has joined may read the books, unless by prior agreement with them.  This is very much the Blockbuster or Video Ezy model, rather than the outsourced public library model.

5 libraries for 9.6 million people

The crux of the problem seems to be that India’s public library system, including in Bangalore, has been under-resourced and undervalued for many years.  Yes, I get that India is still a very poor country, but I’m surprised that, from what I can gather, India’s public library service is quite bad, with old and damaged stock and a severe shortage of locations and material.  It appears that my assumption that India would have a widespread and well-resourced public library system - with its long literary and learning tradition, it’s famous public service, seemingly endless supply of educated engineers & IT specialists and its British colonial history - was well wide of the mark.

As far as I can ascertain, (not having taken a trip to India), Bangalore has just 5 government-run library locations.  This in a city of 9.6 million people, a city that is known as the ‘Silicon Valley of India’.  Contrast this with the City of Boroondara Library Service, which also has 5 locations - serving a population of 165,000.

Government Failure

What we see in Bangalore is a strange inverse of market failure.  Non-economists have become familiar with the concept of market failure with recent public discourse in relation to climate change (with the famous statement in the Stern report) and more recently, the ‘Global Financial Crisis’, or GFC as it has become known in Australia.  Market failure happens when the market fails to solve a problem efficiently, or sometimes, at all.

In the case of public library services in Bangalore, however, we see an example of Passive Government Failure.  The whole point of public libraries is that they are the most efficient and effective way of ensuring a literate and informed citizenry with access to the shared stories and concepts that one needs to understand to participate fully in society.  This can only be done in the most optimised manner by running a library service available to everyone.  It is, in fact, itself a response to market failure.  So the case of Just Books actually highlights a market attempt to a Government failure to effectively solve a market failure.

The Anti-Public Library

Except it doesn’t solve it.  Just Books is more than a snappy brand name - they mean it literally.  At a Just Books franchise you walk in, pay your Rs. 250 and get to borrow a couple of books.  You don’t get help to find resources for your school assignment.  You don’t get assistance finding and completing a government form from a Department you’ve never heard of.  You don’t get storytime for the kids, followed by professional advice on which parenting books are the best for when your child isn’t coping with their new sibling being around.  You certainly don’t get to just hang out in the air conditioned comfort for a while leafing through magazines before you walk to the bridge you sleep underneath.  If you’ve read the name of this blog you may have an understanding of whether I think simply loaning books to people constitutes a public library service.

Just Books isn’t even good value.  For Rs 2500 per year you get to borrow three books a month.  That’s about $52 in Australian currency.  Government-run public libraries in Victoria spend about $36 per person annually and allow members to borrow as many items as they like - even those that have borrowing limits only apply these to simultaneous loans - if you’re a fast reader you can still borrow as many items as you like, as long as you return the last batch you had.

But it gets worse - While in Victoria we’re getting a modern, RFID-enabled library service for $36 per annum, in Bangalore they’re paying Just Books $52 to loan books on Indian incomes.  The average Bangalore resident is paid about Rs. 75,000 (bearing in mind that the average doesn’t necessarily mean the most common income).  This makes Rs. 2500 3.33% of an ‘average’ Bangalore worker’s annual income.

Using the same crude measure (Gross income per capita), the average Australian earns around $51,000 and, if paying an equivalent portion of her income, would shell out $1,700 for the privilege of borrowing three books a month.  You might like to remember that next time you hear someone complaining about paying their Council rates.

The Cash Converters of Libraries

I explored this model because on reading the Forbes article I had an uneasy feeling about the concept, but couldn’t quite put my finger on why.  Thinking it through, it becomes clear that Just Books is actually the Cash Converters of lending libraries - an over-priced, bottom-feeding solution that only gets business because the poor have run out of options.  Companies like Just Books only appear when the market or the government have failed to provide adequate options for those who excluded from the market.  In the case of Bangalore, middle-class Indians can afford to pay 3% of their income to borrow books, and are forced to do so because they can’t afford to buy all the books they want to read and their government-run library service simply doesn’t provide an adequate service.  Those who can’t afford Rs. 2500 a year - well, they’re stuck with the mouldy books in Bangalore Central City Library I guess.

I don’t blame Just Books for the situation.  They’re not forcing anyone to join, after all - Sunder Rajan just saw a gap in the market.  I don’t necessarily even blame the Government of Karnataka - they may have the ‘Silicon Valley of India’ in their state, but they’re still responsible for millions of desperately poor people who need food, houses, roads and sewers.  It’s worth pondering, however, a few lessons from the Just Books story.

What Libraries Do

Firstly, when the Small Government wagon next pulls into your town, consider what it is that particular government-funded services actually do.  The politicians who are slashing library budgets in the USA and UK are generally the same people who insist that the unemployed and poor need to be more self-reliant and take responsibility for improving their skills and opportunities.  What they don’t seem to realise is that when the poor, unemployed, desperate and troubled do try to turn their lives around, often the first place they go is to the public library.  Pedro Munoz, a recovering drug addict in New York, says the New York Public Library literally saved his life.  After Hurrican Katrina, it was public libraries to which most people turned when they needed assistance contacting families, getting news and information, accessing Government payments and just generally re-connecting with the world.  Book vending machines can’t help you fill out a form, or teach you to read, or just give you the friendly human contact you crave.  Privatised services may outwardly appear to do the job, but it is often difficult to quantify the value of social services.  If a company like Just Books is making a profit, it's a sign the government is not doing its job.

Secondly, just because a business is offering a service, and people are paying for it, that doesn’t mean it’s the best, most efficient or most optimised way of providing the service.  Aside from the uneasy feeling I had about the inequitable nature of Just Books, it reminded me of something else a little closer to home.  The Just Books model: a paid subscription at an extortionate price, giving you access to a limited number of books, which you are not allowed to lend or otherwise transfer to a friend or relative and which can be taken back at the whim of the company providing them, is rather similar to the current situation with eBooks - even when you’ve “bought” them.

The current eBook market is currently controlled by an extraordinarily small number of companies who tell their customers what they can buy, at what price and under what conditions.  They control your use of their products well after the time of purchase, including the ability to edit or remove eBooks from your reading device and to stop you lending the product to another person.  The price gouging and behaviour-control of eBook providers is really no different to Just Books, it’s just that Just Books does it with physical books.  If you’ve been wondering why public libraries have generally been a little slow on eBooks, this is the real reason - we’re not about to just lie back and get screwed by multinationals, especially when their ideas about controlling information are so opposed to our values of sharing information.

But that sounds like a different post altogether.

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